There aren’t many people who like to think about what will happen when they die or if they become incapacitated or lose their cognitive skills. Avoidance of these unpleasant topics can result in not having an estate plan, which can cause financial problems and stress for the people you care about.

Having a will is a good start. A will documents who you want to handle your financial assets and debts, and who you want to receive your assets after you die. In addition to naming someone to be in charge, it’s a good idea to list one or two other people to step in if that person isn’t able or willing to do the job. If you don’t have a will, then rules put forth by the state will determine who gets your assets. A will is intended to make things more efficient and less costly to finalize than an estate that has no will.

Equally important are documents that tell who can make financial and medical decisions for you if you can’t but are still alive. A durable power of attorney will appoint someone to be your agent to make financial and legal decisions on your behalf. A big decision to make is whether that person has immediate authority to make such decisions or if you must be unable to make those decisions yourself for medical or cognitive reasons in order for that person to step in. Designating a backup if the person who is your agent isn’t able to act is helpful. Not having this document in place could result in bills being unpaid and no one being able to manage your assets in a way to properly care for you.

A living will spells out your wishes for medical care if you’re not able to speak for yourself. This document, or a separate document such as a health power of attorney, can also list the person who would have the authority to direct your medical care, along with one or more other people who could step in to fill that role if needed. Having language that allows this person to obtain the needed medical information to make informed decisions is generally included when giving an individual this authority. Besides the financial drain that can occur from not putting in place such documents, it’s emotionally devastating to loved ones who don’t know your wishes or don’t have the authorization to implement your desires.

These documents are part of your legal life, but also something that your financial adviser will want you to have in place to protect your finances and your legacy.

Linda Leitz is a business columnist and a certified financial planner. She can be reached at linda@peaceofmindfin.com.

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